Natural Gas Futures Flounder Amid Coronavirus Resurgence Fears

Strategic Insights -

Natural gas futures plummeted on Monday as a resurgence in coronavirus cases and uncertain weather forecasts weighed heavily on markets. The December Nymex contract dropped 27.6 cents day/day to settle at $4.789/MMBtu, while January fell 28.4 cents to $4.861. Northeast spot prices, however, surged due to regional demand, with NGI's Spot Gas National Avg. rising 37.5 cents to $5.255.

Key Takeaways:

  • Forecasts indicate light weather-driven demand in December, despite a surge in LNG exports and strong production levels.
  • New coronavirus outbreaks in Europe and the United States threaten to curb energy consumption, with Germany's health minister refusing to rule out a potential lockdown.
  • A deeper trough over the eastern Pacific and waning of the North Atlantic block have led to a warmer pattern for most of the U.S. and Canada.
  • The Energy Information Administration (EIA) is expected to report a withdrawal in the 20s Bcf from storage for the week ended November 19, marking the onset of withdrawal season.
  • LNG demand hovered near records, but remains dwarfed by bearish weekend weather shifts.
  • Production has leveled off, but strong by pandemic standards, near 96 Bcf over the past week.
  • A wintry mix of rain and snow will track across the Great Lakes into the Northeast, ushering in frosty highs of 30s to 40s and lows of 10s to 20s.
  • Cash prices climbed on Monday, led higher by a spike in Northeast prices, with Algonquin Citygate soaring to $9.640 and Iroquois Zone 2 gaining to $7.275.

Statistics:

  • December Nymex contract dropped 27.6 cents day/day to settle at $4.789/MMBtu. (Source: Global Data Point)
  • January natural gas futures fell 28.4 cents to $4.861. (Source: Global Data Point)
  • Northeast spot prices surged 37.5 cents to $5.255. (Source: NGI)
  • EIA expected to report a withdrawal in the 20s Bcf from storage for the week ended November 19. (Source: NatGasWeather)
  • LNG demand hovered near records, but strong by pandemic standards, near 96 Bcf over the past week. (Source: EBW Analytics Group)
  • Production has leveled off, but strong by pandemic standards, near 96 Bcf over the past week. (Source: EBW Analytics Group)

Sources:

  • Global Data Point
  • NatGasWeather
  • EBW Analytics Group
  • Tudor, Pickering, Holt & Co. (TPH)
  • Rystad Energy
  • NGI
  • Energy Information Administration (EIA)